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Audit takes state to task for handling veterans claims

LANSING — For more than a decade, Michigan has failed to provide proper oversight and enforce legislative requirements for reporting veterans’ claims and benefits, according to a recent state audit.

Veterans officials also failed to ensure the effective and efficient use of state grants given to veterans service organizations, such as the American Legion and Veterans of Foreign Wars, according to a state Auditor General report issued in December.

The findings are similar to those disclosed in a 2001 audit of the Department of Military and Veterans Affairs. And they come while the newly created Michigan Veterans Affairs Agency within that department is gaining its footing in ways that state officials hope will address the problems the audits disclose.

Issues noted in the recent audit include:

Performance standards were not given to veterans service organizations as a basis to determine how well they used state grants.

There is no process to verify the monthly number of veterans’ claims sent to the U.S. Department of Veterans Affairs and the amount of monetary benefits veterans received as a result of the claims.

Veterans service organizations did not consistently follow the standardized techniques to calculate these benefits.

Veterans service officers were not available to veterans 16.4 percent of the time they were supposed to be.

Many organizations failed to document expenditures to clarify that state grant money was going toward allowed advocacy and outreach.

The agency did not provide required reports to the legislature for review.

The audit noted that the agency was unaware of some of the legislative requirements.

The Office of the Auditor General audited the agency because so much time had passed since the earlier one, audit manager Lisa Mazure said.

The agency has since issued a mandatory response recognizing the issues and describing a plan for improvement. The auditor’s office will revisit the issues about six months after a corrective plan is put into place, Mazure said.

The audit is ideally timed as the agency is just truly getting underway, however, said Rep. Nancy Jenkins, R-Clayton.

“It’s a reminder of things that we need to focus on and we need to correct,” said Jenkins, who chairs the appropriations subcommittee for military and veterans affair.

Gov. Rick Snyder created the Michigan Veterans Affairs Agency within the Department of Military and Veterans affairs last March to coordinate veterans’ services including compensation and healthcare. While the new agency was the focus of the audit, the department still had authority over the veterans service organization during the audit period, said Suzanne Thelen, director of communications and veterans engagement for the agency.

Although the agency did not become fully functional until October 2013, according to the audit, a director was appointed and began to establish policies and procedures in March 2013.

Issues with veterans affairs were already clear long before the audit, said Nicholas Cook, director of targeted outreach and performance management for the new agency.

“It kind of justifies why the agency was developed,” Cook said. “There wasn’t a central coordinating spot … We didn’t have the proper amount of oversight.”

The blame fell on all parties involved in delivering veterans services in the state, Cook said.

While the state has certainly had issues with veterans’ affairs in the past, Sen. John Pappageorge, R-Troy, said there have been large improvements, especially in the number of veterans claims resulting in benefits.

Pappageorge is a veteran and serves as vice chair on the Senate committee for veterans, military affairs and homeland security.

The claims rate has jumped from about three to seven percent of fully developed claims to 51 percent since the introduction of the agency, Cook said.

Cook and Pappageorge’s enthusiasm for the agency’s ability to effect change for Michigan veterans is shared with veterans such as Cadillac Veterans of Foreign War Post adjutant Jack Baughan.

“It’s kind of upsetting,” Baughan said of learning of the audit. “I’m hoping the new organization will get it straightened out.”

Baughan said it was upsetting to learn of the issues found in the audit, particularly because veterans already face so many problems.

The 66-year-old Vietnam veteran from Wexford County has been attempting for almost a year to receive financial benefits to support him through his fight with prostate cancer. Although he learned in summer 2013 that his paperwork was received, he has yet to be granted benefits.

He has insurance through his company and has paid some out of his own pocket for the medicines and treatment, Baughan said. He has been on long-term disability since a heart attack in July 2013.

Baughan said having access to a veterans counselor and officer was essential to completing the necessary forms in his attempts to get medical support.

However, some counties did not have veterans counselors or counselors with appropriate accreditation according to the audit —something officials at the new agency said would change.

According to the audit, the department is supposed to work with the counties to achieve an ideal of one counselor per county. In addition, some counselors were unaware of the necessary training and the ability to have travel and expenses reimbursed. About 27 counties did not have accredited counselors.

Counties without counselors listed on the Michigan Association of County Veterans Counselors website included Crawford, Lake, Wexford, Arenac, Ionia and Mason counties.

A counselor from Saginaw has been visiting in Wexford weekly, Baughan said.

In the governor’s newly proposed budget, $250,000 was allotted to veterans service counselors needs and $750,000 for new regional coordinators.

The agency’s formal response to the audit noted:

It has developed a new contract with the five main veteran service organizations in the state addressing many of the issues the audit notes.

It will redistribute service officers based on the governor’s economic prosperity regions outlined in August 2013.

It will use one reporting system and report more often

Training of accredited counselorswill be handled by the state directly to insure accreditation and that there are training locations across the state for attendance.

Four of the five main service organizations receiving state grants signed this new agreement.

The Military Order of the Purple Heart declined to sign the contract due to concerns over the level of state control, said Ronald Knapp, the group’s former department commander for Michigan and current adjutant.

“They set up a situation where they wanted to control each service organization staff — when our staff would go to work and how much they get paid on an hourly rate,” he said.

“Even if we have to make cuts, it’s not worth what they’re offering,” Knapp said.

The Military Order of the Purple Heart raises most of its own funds, Knapp said.

Cook said all veterans service organizations took part in the creation of the agreement and the payment of the staff was the order’s choice after money had been given to the group.

Knapp had concerns with the audit itself and said legislators never set guidelines for standards in the first place. In addition, he had concerns with the accuracy of some statements within the audit.

The governor’s recent budget proposal shows needs in the audit are being addressed, Jenkins said.

The governor’s budget proposal included about $85.5 million for veterans outreach and services, and veterans’ homes. The latter will receive a majority of the funding. About $15.4 million will go toward veterans’ outreach and services, which includes new funding of $2.2 million for the new agency.

Under the proposed budget the MVAA will continue to receive $2.9 million in state grants to distribute to veterans service organizations.

Michigan has about 680,417 veterans, according a recent report by the MVAA to the House appropriations committee on Military and Veteran Affairs. It’s the 11th largest veteran population in the country, comprising about 7.1 percent of the state population.

Michigan is 12th highest for total compensation and pension spent on veterans among states, the District of Columbia, Puerto Rico and Guam, according to the audit analysis of U.S. Department of Veterans Affairs analysis. However the state is 39th in average compensation and pension spent on veterans. The state is also 10th in medical care spent on veterans and 49th in average total claims spent on veterans.

The state’s number of veterans was comparable to states such as Illinois, Ohio, Virginia, North Carolina and Georgia, according to U.S. Department of Veterans Affairs statistics. The only states with more veterans were Texas, California, Florida and Pennsylvania.

Wayne, Oakland and Macomb counties had the highest number of veterans, according to the data, with more than 50,000 veterans in each county.

Most counties in the Lower Peninsula north of Gratiot and Montcalm had between 1,000 and 5,000 veterans, according to data presented by the Michigan Veterans Affairs Agency. However, Grand Traverse, Marquette, Midland and Bay counties had between 5,000 and 10,000 veterans while six of the 15 counties in the Upper Peninsula had less than 1,000.